CONSUMER PERCEPTION ON ALTERNATIVE POULTRY

T. Farina and S. Almeida / International Food and Agribusiness Management Review Vol 5 Iss 2 2003

Despite the higher costs, alternative production has shown to be an interesting
opportunity for investment for aviculturists, because, contrary to the conventional
aviculture that has presented super production in the last years, the growing demand for
alternative chickens has surpassed production. Despite the characteristics that
differentiate alternative chickens are not easily observable, the fact is that, in the
market, there are substantial differences in prices between the alternative and the
conventional. This is a concrete signal that the consumer is willing to pay price premiums
for quality attributes associated to the production process (Torne-Celer, 2001).

2.2 Coordination Problems of the Alternative Aviculture Agribusiness system

In growing markets, such as that of alternative chicken, the action of opportunistic
agents can harm the market. For example, a producer could use growth promoters in an
attempt to reduce production costs and sell the product as alternative chicken, since the
consumer has no tools to inspect the productive process at low cost. Nevertheless,
insomuch as consumer distrust increases in relation to the quality of the product, he will
no longer be willing the pay the price premium. That is prejudicial both to the supply
side as well as demand, since the producer will not manage to sell his differentiated
product for a fair price and the consumer, who is willing to buy a differentiated product
for a higher price, will not find it in the market. That is, the market for differentiated
chicken could become a “market for lemons”. Akerlof shows that in a market where there
is asymmetry of information between producers and consumers, the low quality product
expels the high quality product because the consumer prefers to pay the low price when
there is no way to ascertain the quality of the superior product.

Another characteristic of this market are the strong interdependences, both horizontal
and vertical. The vertical relationships are extremely important, because for the product
to be organic, natural, or free-range, all the stages of the process must be in accordance
with their respective standard. The horizontal interdependences are not less important
as the action of each producer affects the reputation of all agents of the same production
stage. The literature uses the expression “netchains” for those organizational
arrangements that are characterized by strong horizontal and vertical interdependences
(Lazarini et al, 2001; Pensa 2002). Due to these strong interdependences, certification
plays a decisive role in the smooth functioning of this market.

The characteristics that differentiate the alternative chickens are related to a standard of
process and not of product, that is, a standard not observable by the consumer or client,
at low cost. This makes the process far more complicated. For the production of
alternative chicken to be certified, all the agents of the productive chain must be certified
to guarantee that they will act according to the norms that define a product as organic or
alternative.

In a situation of asymmetry of information, in which most of the characteristics of the
production process are not perceived, the consumer finds in the authenticity seal a

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